What you don’t know about Personal Property Securities Register
If your business has ever been involved in the leasing of property, a recent court case has proved that a simple clerical error on something such as a Personal Property Securities Register could cost you millions.
In a dispute between OneSteel Manufacturing Pty Ltd and Alleasing Pty Ltd, a seemingly routine leasing of equipment and parts from one company to another has resulted in Alleasing losing legal rights to $23million worth of assets. The clear winner in this scenario, the Voluntary Administrators of OneSteel Manufacturing, took advantage of an error made by Alleasing in which a Personal Property Securities Register (PPSR) registration was incorrectly completed, resulting in the forfeiture of $23million worth of assets.
The simplicity of the case is frightening.
In 2014, Alleasing leased $23million worth of assets to OneSteel. Alleasing then performed a personal property securities register registration against OneSteele, using its Australian Business Number as the identifier. This registration is performed to demonstrate that Alleasing has an interest in the goods they own on the PPSR. On June 7th 2016 OneSteele appoints Voluntary Administrators and on the 10th of June, those administrators advise Alleasing that they will be keeping their equipment as their registration is invalid. As Alleasing used their ABN instead of their Australian Company Number (ACN), the registration was not legitimate and OneSteel gained ownership of the assets. This dispute was taken to the NSW Supreme Court and on the 31st of January 2017, it was confirmed that Alleasing lost legal ownership of the assets.
Since the commencement of the personal property securities register, we have advised that when registering a company, it is essential to use it’s ACN and not it’s ABN. The heart of the issue is that anyone searching the PPS Register using the correct identifier (it’s ACN) would not have been aware of Alleasing’s registration. As a result, the Court ruled that Alleasing’s registration was defective and seriously misleading.
This case goes to show, that an error as small as misusing an ACN instead of an ABN can cost your company millions of dollars. As scary as this sounds, you have no need to worry as Marsh Tincknell is here to help. With over 25 years of experience we’ve seen cases like this before and helped countless clients avoid falling into similar traps.